Managing Expenditure Pressures for Sustainability and Growth
roads department, expenditures on periodic maintenance dropped from GEL 22.5 million in 2008 to GEL16.3 million in 2009 and to a projected GEL 3.1 million in 2010. This amount represents less than ten percent of the funds necessary to provide periodic maintenance interventions to the roads every ten years. The local road network is in very poor condition and reliable data on expenditures or conditions is not available. The organic Law on Local Self-Government (LSG) established a two level administrative framework in Georgia effective November 2006, comprising the central government and local governments. The change resulted in the consolidation of 1,100 small and resource-poor LSG units into 69 units.57 While the international and secondary road networks benefited from the increased funding of the last four years, the tertiary or local roads network continues being mostly in very poor condition. Reliable data on the condition and expenditures in local roads is not available. The government, with World Bank financing, has started the condition inventory of the 13,000 km network of local roads and the preparation of the basic data bank necessary for planning future interventions. Despite the lack of hard data, government officials and stakeholders agree that local roads are in urgent need of rehabilitation in order to become maintainable. In 2010, about 15 percent of the budget for local governments are planned to be allocated for roads. The lion share of the GEL 226.6 million allocated through local budgets for roads goes to city streets (mostly Tbilisi) leaving about GEL 49.1 million for the 13,000 km of the local network that connects villages in rural areas (see Table 5.4). This amount, once the cost of basic maintenance (including winter maintenance) to keep the roads passable is subtracted, would allow for the rehabilitation of less than 50 km of roads per year. Table 5.4. State Government Transfers and Expenditures on Local and Urban Roads in thousands of lari
Total Central Government Transfers...
....of which expenditures on roads
Cities
995,952.0 741,940.0
177,492.0
Municipalities
469,712.5
49,117.0
of which Tbilisi
Total
Source: Ministry of Finance of Georgia.
1,465,664.5
137,000.0
226,609.0
Urban roads are being improved at a healthy rate, although mostly in Tbilisi. The city of Tbilisi budget for roads in 2010 amounted to GEL 137 million of which GEL 95 million was for the central Tbilisi government for the improvement and maintenance of the main arterial urban roads and the rest to the five Tbilisi districts which are responsible for less trafficked roads. About 55 percent of the central roads are in good condition, and Tbilisi officials plan to complete the total rehabilitation of the central network in about four years. Once the rehabilitation process is completed, it is estimated that the maintenance of the main city links will require annual budgets of about GEL 10-15 million. The city of Tbilisi accounts for 85 percent of the urban road network of the largest five Georgian cities. There is room for improving the efficiency of road sector expenditures. Several factors adversely impact the quality of road sector expenditures, of which the most salient are: (i) the lack of a systematic process of project
57 The 69 new units consist of 59 former Rayons, 4 former Districts, and 5 special status cities - Tbilisi, Kutaisi, Batumi, Rustavi, and Poti. Local councils are elected in these local self-governments which encompass 3,736 settlements (cities, towns and villages).
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Chapter 5. Road Sector Expenditures